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Saab shares soar on Brazil fighter jets deal

UPDATED: The shares of Swedish defence firm Saab soared more than 23 percent on Thursday after the group secured a $5 billion contract to equip the Brazilian air force with 36 new fighter jets.

Saab shares soar on Brazil fighter jets deal

Saab's B share, which represents around 50 percent of the company's capital, was up by 23.83 percent in early trading on Stockholm's stock market. The increase generated a 2.15 billion kronor ($330 million) surge in the company's market value. The shares had opened with a 30.17 percent rise.

"I am extremely proud of the confidence that the Brazilian government has placed in Gripen NG … the world-leading and most affordable fighter," Saab chief executive Håkan Buskhe said in a statement.

The Gripen is Saab's flagship product and the company's largest bet for the future.

The three finalists in the long-deferred FX-2 air force replacement program were the Rafale made by France's Dassault company, US aviation giant Boeing's F/A-18 fighter and Swedish maker Saab's Gripen.

"After analyzing all the facts, President Dilma Rousseff directed me to inform that the winner of the contract for the acquisition of the 36 fighter jets for the Brazilian Air Force is the Swedish Gripen NG," Brazilian Defence Minister Celso Amorim told a press conference on Wednesday.

The announcement came after more than ten years of discussions and repeated delays due to budgetary constraints.

The Gripen, which was said to be the cheapest of the three aircraft, is capable of performing an extensive range of air-to-air, air-to-surface and reconnaissance missions. It is in use in the air forces of Britain, South Africa, the Czech Republic, Thailand and Hungary.

In 2009, then president Luiz Inacio Lula da Silva expressed a preference for the French Rafale but later backtracked and left the choice to his successor Dilma Rousseff.

The air force said it needs the new fighter aircraft to maintain an adequate air defence as it is to retire its twelve Mirage jets in late December. Brazil bought the refurbished Mirage 2000 C/Bs from France in 2005 for $80 million to fly for five years.

Brazil is also seeking technology transfers so that the planes can be assembled in this country and give a boost to the domestic defence industry.

Rousseff postponed a decision on the FX-2 replacement contract in early 2011 for budgetary reasons but air force chiefs have insisted that it is an urgent matter.

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CORRUPTION

Fresh bribery claims in Swedish jet scandal

Swedish defence firm Saab paid around a billion kronor to shady middlemen as part of a controversial deal to sell fighter jets to South Africa, according to documents obtained by a Swedish tabloid.

Fresh bribery claims in Swedish jet scandal
A Jas 39 Gripen jet flies above Cape Town in South Africa. Photo: AP Photo/mbr/The Star

Saab's sale of 28 Jas 39 Gripen aircraft – later reduced to 26 – to South Africa has been tainted by scandal and corruption allegations ever since it took place back in 1999.

The Swedish defence giant has always denied any wrongdoing in the deal which was mainly carried out by a subsidiary owned by Saab and British BAE and has said that no evidence of any suspect deals has turned up in its internal investigations.

But according to Sweden's Expressen newspaper, internal BAE documents handed to the Serious Fraud Office (SFO), a UK-based government authority that investigates fraud and corruption, show that money was paid out to shady agents suspected of being involved in bribery.

According to the paperwork, 7.25 percent (or 13 billion kronor – $1.58 billion) of the total sales of the Gripen planes and the British Hawk aircraft was potentially handed over to secret agents. According to Expressen, the claims formed part of a UK investigation into bribery allegations linked to this cash.

Other classified documents published by the newspaper on Thursday suggest that BAE's former head of marketing for South Africa and Asia, Allan MacDonald, told SFO officers several years ago that Saab had been kept informed of all costs and the agents involved.

“I gave them more information than they had ever got before and they were informed about the arrangements with the agents on chief executive level. They knew,” the documents suggest he said.

In a statement to Expressen published on Thursday, Saab's press spokesman Sebastian Carlsson dismissed the claims that almost a billion kronor was handed to agents, but did not deny that large payouts were made.

“There's nothing strange about a person receiving compensation for the work they do. So I mean, that's not the problem, if there is a problem. The problem would in that case be what a person does,” he told the newspaper.

“If it was 7.5 or 6.5 or 4.5 or 10.5 percent [is irrelevant]. That's nothing, that's what it was like 'in the good old days'. But I can tell you that if back then you had these kinds of commission-based contracts in the export industry, the sums could sometimes be high,” he added.

Saab is one of the world's leading defence and security companies and has around 14,700 staff around the world. It is not connected to Saab Automobile.

Earlier this year it was ranked as one of the European arms companies best at tackling corruption by the Transparency International thinktank.